Canopy Growth Stock Up in Smoke After Q4 Miss

The company plans on implementing a full strategy reset in 2021

Deputy Editor
May 29, 2020 at 9:20 AM
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The shares of marijuana producer Canopy Growth Corp (NYSE:CGC) have taken a serious tumble off yesterday's three-month peak, after reporting a fiscal fourth-quarter loss -- which included $743 million (Canadian) in impairment and restructuring charges -- and revenue that missed analyst expectations. Medical marijuana was the singular strong spot for CGC's fourth quarter, while recreational markets sputtered. The Canada-based company said that it plans on implementing a full strategy reset in 2021. At last check, the security is down 18.5% at $17.70.

This puts CGC right back below its 120-day moving average -- a former area of resistance the equity breezed past in its rally off the $13 level earlier this month. In fact, in the last 10 days, Canopy Growth closed in the red only twice, boasting a 35.8% monthly win, coming into today. Yesterday's rally lost steam at familiar pressure near the $22 region before pivoting back down to its mid-May levels today.

The majority of analysts are lukewarm on the pot stock. Of the 16 in coverage nine say "hold," and seven say "strong buy." Meanwhile, the consensus 12-month price target of $23.97 sits at a 10% premium to last night's close, which could leave the door wide open for price-target cuts, should today's losses hold. 

Short sellers have also been quick to jump on the bearish bandwagon. Short interest is up 12.3% in the last reporting period, representing a solid 21.1% of the stock's available float. In other words, it would take almost seven days to buy back these bearish bets at CGC's average pace of trading. 

A short-term breather could already be in the cards for Canopy Growth. This is per its 14-day Relative Strength Index (RSI) of 76, which sits firmly in "overbought" territory. 

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